2010 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

12-23-2010

Carlos and Carol Martino v. Everhome Mtg

Precedential or Non-Precedential: Non-Precedential

Docket No. 10-1247

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Recommended Citation

"Carlos and Carol Martino v. Everhome Mtg" (2010). 2010 Decisions. Paper 35.

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 10-1247

_____________

CARLOS and CAROL MARTINO, Individually and as a class 

representative on behalf of those similarly situated,

 Appellants

v.

EVERHOME MORTGAGE; COOPER, PERSKIE, LEVENSON, 

APRIL, NIEDELMAN & WAGENHEIM, P.A.

_____________

Appeal from the United States District Court

for the District of New Jersey

(D.C. No. 1-09-cv-00011)

District Judge: Honorable Joseph E. Irenas

_____________

Submitted Under Third Circuit LAR 34.1(a)

November 18, 2010

Before: BARRY, CHAGARES and VANASKIE, Circuit Judges

(Filed: December 23, 2010)

_____________

OPINION OF THE COURT

_____________
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VANASKIE, 

In August of 1996, EverHome

Circuit Judge.

Carlos and Carol Martino sued EverHome Mortgage (“EverHome”) and its law 

firm, Cooper, Perskie, Levenson, April, Niedelman & Wagenheim, P.A. (“Cooper”), 

alleging that the Defendants unlawfully charged and collected various fees and costs. 

The District Court granted EverHome’s and Cooper’s motions to dismiss for failure to 

state a claim, and it subsequently denied the Martinos’ motion to file an amended 

complaint. The Martinos appeal the denial of their motion to amend. For the reasons that 

follow, we will affirm the judgment of the District Court.

I.

1

EverHome obtained a final judgment of foreclosure against the Martinos in June

of 2001. The judgment awarded EverHome “the sum of $32,789.13 with interest at the 

contract rate of 15.50 percent on $30,217.91, being the principal sum in default 

(including advances, if any) from April 1, 2001 to 6/26/01, and lawful interest thereafter

on the total sum due [EverHome] together with costs of this suit to be taxed, including a 

commenced foreclosure proceedings after the 

Martinos defaulted on their mortgage. The Martinos then filed a Chapter 13 bankruptcy 

petition in May of 1997. That bankruptcy case was dismissed in October of 1997. The 

Martinos filed for Chapter 13 bankruptcy again in March of 1998, and their plan was 

confirmed in May of 1999. The bankruptcy court dismissed that case in December of 

2000.

 1 Prior to 2004, EverHome went by the name of “Alliance Mortgage Company.” For the 

sake of clarity, we will refer to the Martinos’ mortgage lender as “EverHome” 

throughout.
3

counsel fee of $477.89.” (A. 227.) The judgment of foreclosure also authorized the sale 

of the Martinos’ property “to raise and satisfy the several sums of money due in the first 

place to [EverHome] in the sum of $32,789.13 together with contract interest and lawful 

interest thereon as aforesaid, with [EverHome’s] costs to be taxed, with lawful interest 

thereon.” (Id.

In December of 2004, Cooper, responding to the Martinos’ request, indicated that 

the amount required to satisfy the mortgage totaled $46,678.27, consisting of the 

mortgage payoff balance, accrued interest, Sheriff’s commission and costs, attorneys’ 

fees, and other costs of suit. In January of 2005, Plaintiffs received a revised payoff 

amount of $34,471.95, consisting of $31,044.63 to EverHome and $3,427.32 to Cooper. 

On or about January 25, 2005, the Martinos paid the sum of $34,471.95 in satisfaction of 

their indebtedness to EverHome.

) About two months after the entry of the judgment of foreclosure, the 

Martinos filed a third Chapter 13 petition. A plan was confirmed in August of 2002. In 

May of 2004, however, the bankruptcy court dismissed the Martinos’ 2001 bankruptcy 

case because they failed to make required payments to the bankruptcy trustee.

The Martinos filed a putative class action suit against EverHome and Cooper in 

January of 2009. The Martinos proposed a class consisting of people who had defaulted 

on mortgages serviced by EverHome and were overcharged attorneys’ fees and other 

costs. The complaint asserted ten claims, all stemming from alleged overcharges by the 

Defendants. To support their claims, the Martinos pointed to discrepancies between 

amounts listed on three documents: (1) the 2001 foreclosure judgment, (2) the 2004 

payoff statement prepared by Cooper, and (3) a Gloucester County Sheriff’s Office 
4

Statement of Sale listing other charges that differed from the amounts on the 2004 payoff 

statement. The complaint, however, neglected to identify any of the Martinos’ 

bankruptcy cases, and it omitted several years’ worth of dealings between the Martinos 

and EverHome.

Cooper and EverHome moved to dismiss the complaint pursuant to Federal Rule 

of Civil Procedure 12(b)(6). In deciding the motion, the District Court went to great 

lengths to piece together the factual background of the case and ultimately concluded that 

the complaint failed to state a claim upon which relief could be granted. After 

summarizing the alleged overcharges, the Court determined that Plaintiffs simply pled 

discrepancies between documents from different sources, and that “[t]he mere fact of a 

discrepancy is insufficient to support an inference of unlawful conduct by Defendants.” 

Martino v. Everhome Mortg., 639 F. Supp. 2d 484, 493 (D.N.J. 2009). Accordingly, the 

District Court granted the motions to dismiss. The Court did, however, grant the 

Martinos leave to file a motion to amend their complaint. Id.

The Martinos then moved to file an amended class-action complaint. The

proposed amended complaint dropped Cooper as a named defendant and contained only 

three counts against EverHome: breach of contract, violation of the New Jersey 

Consumer Fraud Act, N.J.S.A. 56:8-2

at 497. 

et seq., and violation of New Jersey’s Truth-inConsumer Contract, Warranty and Notice Act, N.J.S.A. 56:12-14 et seq. Like the 

original complaint, the amended complaint relied on the premise that the Martinos had 

been overcharged various fees and costs. The amended complaint stated that the 

Martinos paid $64,232.46, which represented the sum of the $34,471.95 sought in the 
5

revised payoff statement from January of 2005, plus $14,376.32 toward the foreclosure 

judgment and mortgage, and $15,384.19 in payments to the Chapter 13 bankruptcy 

trustee between 2001 and 2004. The amended complaint further stated that the Martinos 

should have had to pay only $42,460.66, which represented their calculation of the 

foreclosure judgment, plus interest, taxes, and sheriff’s fees and commission. 

The amended complaint, however, suffered from the same deficiencies as the 

original complaint: it glossed over important dates, and it assumed wrongdoing by 

referencing different dollar amounts on unrelated documents. The District Court 

observed that

Plaintiffs’ entire theory of liability is based on the premise that after three 

separate bankruptcy cases spanning more than six years, Plaintiffs were 

only legally obligated to pay the amount of the foreclosure judgment plus 

sheriffs’ fees and commission. Such a premise cannot possibly be true. 

The foreclosure judgment represents only the amount of the mortgage in 

arrears at the time the judgment was entered in 2001 (and, as the judgment 

indicates, interest that runs on the judgment thereafter). Plaintiffs’ 

payments in bankruptcy throughout 2001, 2002, 2003, and 2004, however, 

were not just payments to cure arrearages but also payments to bring their 

mortgage current. Thus, one would fully expect Plaintiffs to pay more than 

the amount of the foreclosure judgment (plus sheriffs fees and commission)

in bankruptcy. Therefore, the facts pled do not support an inference of 

wrongdoing.

Martino v. Everhome Mortg., Civil Action No. 09-011, 2009 U.S. Dist. LEXIS 118540, 

at *6-7 (D.N.J. Dec. 21, 2009) (footnote omitted). The District Court concluded that the 

proposed amendment was futile because the amended complaint failed to state a claim 

upon which relief could be granted. Id. at *7-8. Accordingly, the Court denied the 

Martinos’ request to amend their complaint, and it dismissed the case with prejudice. 

The Martinos now appeal the District Court’s order denying their motion to amend.
6

II.

The District Court had jurisdiction pursuant to the Class Action Fairness Act of 

2005, codified at 28 U.S.C. § 1332(d). We have jurisdiction pursuant to 28 U.S.C. 

§ 1291. 

We review the District Court’s denial of the Martinos’ motion to file an amended 

complaint for abuse of discretion. See Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir. 2000). 

A court may deny a request to amend a complaint if the amendment is futile, i.e. the 

proposed amended complaint fails to state a claim upon which relief can be granted. See

id. Accordingly, when faced with a request to amend a complaint, a district court 

undertakes the same analysis of legal sufficiency that it would under Federal Rule of 

Civil Procedure 12(b)(6). See Travelers Indem. Co. v. Dammann & Co., Inc., 594 F.3d 

238, 243 (3d Cir. 2010). The court abuses its discretion if an erroneous view of the law 

underlies its determination that amendment is futile. See id.

Substantially for the reasons set forth in the District Court’s opinion, we agree that 

the proposed amended complaint fails to state a claim upon which relief can be granted. 

All of the Martinos’ claims rely on the notion that they should not have had to pay 

anything more than the foreclosure judgment, plus interest and some small additional 

costs. The Martinos’ theory of the case overlooks the fact that they were involved in 

several years’ worth of bankruptcy proceedings involving EverHome and Cooper. As the 

District Court observed, one would expect the bankruptcy proceedings to give rise to an 

obligation to make payments exceeding the amount of the foreclosure judgment plus

Sheriff’s fees. Therefore, we agree with the District Court that the amended complaint 

 
7

does not “plead[] factual content that allows the court to draw the reasonable inference 

that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,

Much like the Martinos’ arguments before the District Court, their arguments on 

appeal rely on disparities between cherry-picked numbers from disparate documents. For 

example, the Martinos assert that they were overcharged $450 for “sheriff’s sale costs 

and commissions.” (Appellants’ Br. at 24.) This alleged overcharge appears to derive 

from an undated Cooper document entitled “Breakdown of Fees and Costs.” (A. 245.) A 

handwritten note on the document says, “Cost Advance 450.00.” (

129 S. Ct. 

1937, 1949 (2009). The District Court did not abuse its discretion in denying the 

Martinos’ motion to file an amended complaint.

Id.

We write further to address the Martinos’ argument that our holding in 

) By contrast, the 

Gloucester County Sheriff’s Office Statement of Sale lists a total of $1,170.91 in sheriff’s 

fees and commission, but this amount does not include a cost advance of $450.00. The 

Martinos argue that this discrepancy supports their claim that they were overcharged. We 

agree with the District Court that the mere existence of such discrepancies between 

disparate documents does not support an inference that EverHome violated the law. 

In re A & P 

Diversified Technologies Realty, Inc., 467 F.3d 337 (3d Cir. 2006), compels us to reverse 

the judgment of the District Court. In A & P Diversified, the mortgage at issue required 

the debtor to pay the lender reasonable attorneys’ fees in the event of default. Id. at 339. 

The debtor defaulted, and the lender commenced foreclosure proceedings. Id. The 

debtor then filed for bankruptcy, which stayed the foreclosure. Id. The lender, however, 

obtained relief from the stay, and secured a final judgment of foreclosure while the 
8

bankruptcy case was still pending. Id. The lender fully collected the foreclosure 

judgment, which included some attorneys’ fees, in state court proceedings. Id. at 340. 

We determined that the lender could not subsequently obtain additional attorneys’ fees by 

filing a claim in bankruptcy court because the mortgage merged into the foreclosure 

judgment. Id. at 343. Therefore, the mortgage documents’ allowance of attorneys’ fees 

no longer governed, and the lender was limited to fees permitted under New Jersey Court 

Rule 4:42-9. Id.

The Martinos’ reliance on 

at 344. 

A & P Diversified is misplaced. We did not hold, as the 

Martinos suggest, that New Jersey Court Rule 4:42-9 limits all fees a lender may recover 

while any foreclosure is pending. Here, unlike in A & P Diversified, the bankruptcy 

proceedings were commenced after the final judgment of foreclosure but before the 

judgment was satisfied. As a result of the bankruptcy, one would expect EverHome and 

Cooper to incur expenses that were not included in the foreclosure judgment. A & P 

Diversified

III.

does not limit the amount of fees EverHome and Cooper can recover in these 

circumstances. 

Because we agree that the proposed amended complaint fails to state a claim upon 

which relief can be granted, we will affirm the judgment of the District Court.